The official magazine of the National Reverse Mortgage Lenders Association July - August 2011 Volume 4 No. 4 • www.NRMLAonline.org Another Peek Inside The Retirement Toolbox Visiting the Agencies, Programs, and Policies On the Side of the HECM customer Page 10

City In Conflict Highlights from NRMLA’s Annual Policy Conference - p. 8

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Markets & Lenders 28 & 29

Voices of Retirement Security: A Look at the Agencies and Entities Trying to Bridge The Vast Retirement Funding Gap 12 Balanced Viewpoint By Peter Bell, President of NRMLA

Recent Events Equate PUBLISHER to Opportunity Peter Bell The recent departure from our business by two of the nation’s largest banks has led many, both [email protected] inside and outside of the mortgage industry, to wonder if there is something wrong with what EDITOR we do? While insiders understand that decision-making processes at large financial institutions Marty Bell weigh many factors and in the end ask if the profit potential is commensurate with the perceived risks, the full [email protected] extent of that evaluation is not fully understood by outside observers. In the case of the reverse mortgage business, aSSOCIATE editoR the risks include reputational and public relations concerns, as well as the actual business risks associated with Darryl Hicks the particular product. [email protected] With all the adverse publicity surrounding the major banks’ mortgage lending activities, foreclosures and workout policies, the reputational issues that could emerge from having to pursue collection, acceleration and possibly NRMLA executive foreclosure against elderly homeowners were apparently deemed to be inconsistent with the contribution to Committee Co-chairs the companies’ bottom lines made by originating reverse mortgages. Furthermore, compliance issues, coupled Cheryl MacNally with the possibility of jeopardizing FHA approval for the much more robust (and profitable) forward mortgage John Nixon business, led these banks to conclude that reverse mortgage origination was not an appropriate undertaking at Art Director this particular point in time. Will they return at some point? I would bet yes, but it might be a while down Alex Kwanten the road. [email protected] In the meantime, this change can be viewed as much as a positive development for the remaining participants in the business as a negative. On the negative side, the departure of two of the largest name brand players leads Advertising SALES some to believe the concept of reverse mortgages generally or the HECM product might be flawed. On the Marty Bell other hand, as we all know, the need for reverse mortgages continues to grow and the demand is sure to [email protected] increase as the Boomers age, giving remaining participants the opportunity to pick up the approximately 40% Reverse Mortgage is the official market share that had previously been served by the two giants – and a commensurate boost in revenues to publication of the National Reverse invest in marketing, systems development and personnel. Surely there will be some winners among smaller Mortgage Lenders Association. The magazine is published every two companies who can now grow more rapidly with competition from these behemoth organizations out of the way. months by Royal Media Group on The giants had such ample market share for a few reasons. Their footprints were broad and their reach wide. behalf of the association. For inquiries regarding association membership They had the resources to implement marketing programs and conduct sales training opportunities. They and/or magazine subscriptions, please had brand recognition that provided a degree of confidence to consumers – although some might argue that call Linda Latimore at 202-939-1793. their brand value has been seriously eroded by constant headlines about their mortgage activities through the Advertising and editorial inquiries should be directed to 212-564-8972 or financial meltdown. [email protected]. In order to capitalize on the opportunity, the industry needs a few things. First of all, HUD’s reaffirmed commitment Association & Subscription Contact: to the program is important to reassure the public at large, lenders, investors, policymakers and others that the National Reverse Mortgage Lenders Association HECM program is here to stay. Statements to that effect have been made by recent HUD Deputy Assistant 1400 16th St., NW, Suite 420 Secretary Vicki Bott in an interview conducted by personal finance columnist Ron Lieber and reported in the Washington, DC 20036 202-939-1760 NY Times. Similar statements have been made to NRMLA EVP Steve Irwin and me in meetings with Ms. Bott, [email protected] former Acting FHA Commissioner Bob Ryan, and Karin Hill, who directs the office in which HECM is Industry: www.nrmlaonline.org administered at HUD. They have all re-iterated the importance of keeping this program viable and widely available. Consumers: www.reversemortgage.org Secondly, there will have to be some adjustments made to the HECM program recognizing the financial Advertising & Editorial Contact: Royal Media Group environment that we operate in today. When the program was created, there were two major assumptions that 80 Broad Street, Suite 1701 have changed drastically. One is that homes serving as collateral for HECMs would continually appreciate in New York, NY 10004 (212) 564-8972 value creating a cushion in underwriting. The other is that senior homeowners would draw down funds a little [email protected] at a time to help meet their ongoing living expenses. The program was not initially conceived as a vehicle for www.royalmedia.com home owners (many of them younger than the anticipated borrowers) to draw down all the funds upfront, ©2011 National Reverse Mortgage payoff larger mortgage balances and continue living in the home for longer durations of time. That is what it Lenders Association has become to a large extent. This is not bad; it shows the great flexibility of HECM as a retirement financial management tool. But, it does necessitate some re-thinking of the parameters of the program. Thirdly, the industry, either on a company-by-company basis or across the industry as a whole, must adopt consumer-centric marketing and customer service policies and procedures that help prospective reverse mortgage borrowers gain the comfort they need to move forward with their transactions. They must be assured that they are being given accurate, comprehensive information; presented with the full array of available product options; helped with preparing to make the most out of counseling; and ample time to make an informed decision. NRMLA is at work designing an industry-wide program to accomplish just this and you will be hearing more about it in the month’s ahead as our 2011 Annual Meeting, October 24-26, in Boston approaches. Plan on being there to be part of the excitement. —P.H.B.

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tory ime with anessa alore program’s web site provides them with a means to tell their life S T V V stories so that they can stay in touch with their families and The Reverse Mortgage Counselors Association has recently share their knowledge. introduced a new senior membership service that allows seniors RM: How did you come up with this idea? to talk to each other about their experiences in obtaining reverse mortgages. The senior VV: We know that seniors have a point of view that membership service can be offered to seniors as a they want to share. We wanted a way for them to talk “gift” by their reverse mortgage lenders at a cost to each other and share information about their lives, of $25 to the lender. including their experiences with obtaining a reverse mortgage. We realized the need for smaller custom Communicating about reverse mortgages is only subgroups was becoming a major issue in the wide one benefit of the service, which was developed span of social media. Private, closed communities to further the association’s mission to help reverse make sense for people who want to discuss important mortgage counselors improve the lives of seniors subject matters, and yet, preserve their privacy while and provide resources and information to help sharing information. seniors age in place. As part of this web-based Vanessa Valore program, seniors are also given the opportunity to RM: How does this program work? share their life experiences and tell their life stories VV: It is pretty simple. We created a set of prompts where so that family members and future generations can better seniors can simply answer questions in order to tell a story. We Vanessa Valore understand their lives. Here, of the RMCA, know a lot of people are uncomfortable with writing entire Reverse Mortgage talks about the program and its benefits to . An stories so we created a series of questions located inside of a excerpt from the interview: book. When they answer the questions, the answers are compiled Reverse Mortgage: Why did you decide to debut this service? to tell a story that they can share. A major point of difference with this program involves security and privacy. Seniors can use a Vanessa Valore: We wanted to improve the lives of seniors by passcode that allows them to designate who is allowed to view giving them a service that enabled them to rely on each other to their stories and approve who gets access to their information. get information about reverse mortgages and to share information about their lives. This is all part of finding better ways to help RM: How does that work in terms of sharing information about them age in place. It also restores respect to the elderly reverse mortgages? community by making them the central component of VV: If a mutual friend or a lender believes that the experiences information sharing. Also, the Sandbox Seniors section on the of one senior would benefit another individual, he can recommend they communicate with each other. But the senior with the story has the ability to decide whom he or she wants to “We know that seniors have a point of communicate with. If seniors feel secure in sharing their stories with referrals, they can react by approving access to their infor- view that they want to share. We mation. The goal is to create a safe environment where everyone wanted a way for them to talk to each feels comfortable with personal information they are sharing. For example, even if seniors approve giving access to information other and share information about about their reverse mortgage experiences, they can close off their personal journal or other personal information they don’t want their lives, including their experiences to share with others. with obtaining a reverse mortgage. ” RM: How do seniors get this service? VV: After closing on a reverse mortgage loan, the lender can —Vanessa Valore, President, provide a year’s free service to the senior at a cost of $25 to the Reverse Mortgage lender. Seniors can subscribe and pay for this service themselves Counselors Association but, at least initially, we think most subscriptions will come as

6 Reverse Mortgage July - August 2011 the result of a gift from lenders. We are a nonprofit organization, Previously, Wendorf worked as a reverse mortgage consultant at and we want to charge just enough to support the service. We’re Old Second National Bank. not trying to generate a lot of revenue from advertising like other social web sites. San Diego-based Security One Lending has partnered with Vancouver, Wash-based Columbia Credit Union to serve as its RM: How does this service benefit lenders? third-party reverse mortgage provider. VV: The service also provides a bi-annual client survey and a “We have been targeting credit unions for a bi-annual newsletter that lenders can sponsor to stay in touch couple of years,” Tane Cabe, managing director with seniors. We also provide a database for industry research. of the credit union community bank division, Then there is a quarterly newsletter that lenders can deliver via tells Reverse Mortgage. “It’s another credit union e-mail or as a hard copy to produce direct mail. They also gain in our quiver.” access to counseling from RMCA members. Cabe says Security One has further plans to RM: How can someone get information about the program? Tane Cabe partner with more credit unions. Though he VV: On the RMCA web site, there is a button labeled “seniors couldn’t discuss details, Cabe says he’s working on establishing membership program.” Anyone can click on it to get details relationships in California and on the East Coast. about the program. Hawaii Mortgage Resources LLC dba Reverse Mortgage Specialists of Hawaii has welcomed Shirley Tani to its team. Who’s News Tani, who was born in Toyota and raised in Joe Hansler has joined First National Bank of Honolulu, has more than 25 years of banking Layton (FNB) as its national reverse mortgage experience. Prior to joining Hawaii Mortgage manager. Previously, Hansler worked at Seattle Resources, Tani served as a regional vice- Mortgage and Bank of America, holding president at a bank, overseeing 13 branches. various roles in operations before joining the wholesale and correspondent sales team. Joe Hansler “I look forward to getting back into the mortgage business particularly in a position Hansler’s primary focus at FNB is to grow and expand its retail Shirley Tani where I will be able to help our seniors with production by recruiting high volume brokers to become FNB reverse mortgages,” Tani said. production centers, as well as recruiting experienced reverse mortgage loan officers nationwide. Kenneth L. Austin, Jr. has joined Wendover Consulting, Inc. as Managing Director for Loan Administration. Prior to joining “Our goal is to build an elite team of originators to serve seniors Wendover Consulting, Inc., Ken was President and a founder of in every major market in the United States,” Hansler tells Reverse Mortgage Solutions, Houston, Texas started in 2007. Reverse Mortgage. He is recognized throughout the mortgage banking industry as “My initial focus will be to grow our retail production and build one of the pioneers and leading authorities on reverse mortgages. out a reverse mortgage fulfillment team that is second to none in His former counseling clients span the entire reverse mortgage life service, support and expertise. Long term, I think we would cycle including investment banks, originating lenders and servicers. look at becoming a Ginnie Mae issuer and moving into the correspondent lending space,” Hansler said. “Considering we use Jeff Taylor, President of Wendover Consulting said, “I am excited our owncapital and do not rely on warehouse lines, we’d be at an to have a chance to work with Ken again and his loan servicing advantage against most of today’s correspondent expertise brings a huge dynamic to our company.” Jeff and Ken lenders. However, it wouldn’t make sense were the founders of Wendover Funding, Inc., which became one for us to rush into that space until our retail of the first reverse mortgage lenders who provided training, volume is where we want it to be.” secondary marketing and correspondent programs.

Michael Wendorf of Ottawa has joined We want to hear from you! Send your letters MetLife Bank as a reverse mortgage consultant to the editor to: [email protected] Michael Wendorf for the Great Lakes region.

July - August 2011 Reverse Mortgage 7

Continued on Page 8 ashington’s an atmosphere-driven town and NRMLA’s Washington Policy Conference is always a chance for our members to get a sense of the prevailing mood. (Of course, the atmosphere is determined by recent events and can often last only about as long as the WCherry Blossoms.) Members who attended this year’s event at the L’Enfant Plaza Hotel in May visited a city deeply divided philosophically. As a result, the atmosphere was largely murky. And if you work in a business dependent upon government for clarity about the future so you can plan, murkiness is not what you’re looking for. Like the city that hosted it, this year’s NRMLA policy conference was most characterized by conflicting reports and confusion about the future. At our opening session, Jonathan Miller, formerly on City in the Senate’s Transportation, Housing and Urban Development and Related Agencies (THUD) subcommittee appropriations staff under Senator Patty Murray and now at HUD, warned “expect the unexpected on anything that relates to money.” David Horne of Russ Reid, one of the lobbying firms representing NRMLA, provided an acute observation of recent goings-on. Horne pointed out that the tremendous changes in the House in Conflict viewpoints of housing and financial services is due not only to the shift in the party in power, but also to a shift from leadership NRMLA’s 2011 from coastal/urban areas (Pelosi, Olver, Frank) to leadership from midwestern and southern/rural areas (Boehner, Bachus, Washington Policy Latham). While the latest census may have shown that the population is heading from the center of the country to the edges, in the House, coastal sensibility has been replaced by a Conference mid-American sensibility. By Marty Bell This is coupled with an administration, Miller added, whose mantra is “evidence-based policy.” “There’s been a change in the realm of what’s possible,” Miller said. “And this all bodes well for gridlock.” Two first day panels demonstrated the deep philosophical differences that cause the gridlock: Majority Republican staffers from House financial committees focused on cutting programs while members of the current HUD staff focused on bolstering programs. “My conference (House Republicans) wants smaller government, less risk, fewer programs,” said Mike Friedberg, the current majority staffer on the House Appropriations Committee. “We question whether the government should even be in the businesses of Fannie Mae and Freddie Mac. We are concerned that the FHA insurance fund is below its 2% requirement. We wonder what the next problem, the next crisis will be.” Along with fellow panelist Clinton Jones, general counsel for the House Financial Services Committee, Friedberg seemed to feel a drop in FHA loan limits back to the pre-Recovery act level was a given for fiscal year 2012, which begins October 1. Meanwhile Karen Hill of HUD said her office feels “we do have the authority to maintain $625,500 even if there is a change Congressionally.” In a much rosier presentation than the one

8 Reverse Mortgage July - August 2011 that preceded her, Hill reported that the office of single-family Reynolds, Senior Attorney at the Federal Trade Commission, housing at HUD “continues to focus on the sustainability that where advertising is monitored. “Consumers are looking for will maintain this (the HECM) program.” The development of help. There is a call for heightened scrutiny on both sides and the Risk Management function under Bob Ryan has contributed that’s only likely to pick up.” significantly to FHA’s ability to balance the role of FHA in Reynolds reported her staff finds consumer confusion from supporting it’s mission, it’s current role in supporting the housing misleading claims about HECM being affiliated with or sponsored market and insuring that the MMI fund is sound and sustainable. by the government in some ads; about the terms and features of Hill pointed to the creation of the HECM Saver as a key to keeping loans; about the potential for losing the home; about heirs facing the program profitable for the insurance fund — despite foreclosure; about the different advantages of reverse mortgages skepticism by Hill committee staffers on the earlier panel. The vs. annuities; and about decreases in appraisal value. FHA is counting on the growth of the Saver to lower the number of fixed rate loans and the volume of money insured. HUD In another presentation, Margaret Burns, visiting our conference is looking to the new product to comprise 30% of annual loan for the first time as the Senior Associate Director, Office of dollar volume. In February of this year, the Saver composed 14% Housing Regulatory Policy at the Federal Housing Finance of FHA HECM loan dollar volume. Results from March were Agency (FHFA) which regulates Freddie Mac and Fannie Mae, expected to edge towards 20%. after appearing regularly during her tenure at HUD, reported additional political murkiness about how the Government More murkiness seemed apparent with the appearance of Sponsored Enterprises (GSEs) should proceed as they come out Congresswoman Judy Biggert of Illinois’ 13th District, located of a two-year conservatorship forced by lossses she attributed west of Chicago, the new chair of the Housing subcommittee of primarily to the drop in home values. What existing parts, if any, the Financial Services committee and a Republican who has a should be preserved? What kind of talent is needed to create an long history of bipartisanship. infrastructure that helps housing as a whole? Biggert expressed the sense of shock she felt when she heard that “In the House, the Republicans are eager to put forth legislation funding for housing counseling was thrown out as a part of the last making some things that are already happening mandatory,” minute compromise on the Fiscal 2011 budget. “I said, what Burns said. “They want to are you doing? They can’t legislate reduction in the possibly understand what this Congresswoman Judy Biggert size of the portfolios, higher means or they wouldn’t do it. pricing. they want to repeal It’s unacceptable. I haven’t expressed the sense of shock she some of the mission’s goals gotten the answer on why with an aim towards felt when she heard that funding they did this yet, but I’m winding down the agencies going to,” she promised. for housing counseling was thrown and eventual elimination. Positive news on the counseling “In the Senate, the front came from HUD’s Ruth out as a part of the last minute Democrats are interested in Roman who reported that the compromise on the Fiscal 2011 implementing a new system, department had hired a third though they have not put party vendor to do “mystery budget. “I said, what are you doing? a specific proposal on the shopping” of counselors to They can’t possibly understand what table. There is not interest gauge implementation of in moving too quickly here the new protocol and found this means or they wouldn’t do it. and given all that’s on their that counselors were doing t s unacceptable plate, it will probably mean lengthier sessions and adhering I ’ .” there will be no action.” to the added requirements. A less positive compliance picture was presented by Chuck In other words, more Cross, Vice President for Mortgage Regulatory Policy for the gridlock. Given this, FHFA is looking for a way out of the Conference of State Bank Supervisors. Although he began his conservatorship that does not require legislation. One option is presentation with an enthusiastic endorsement of NRMLA, an recovery, which focuses on lessening the old books and emphasizing association he often points out to others as a model for “doing new business, which is doing well and generating cash. The the right thing at the right time for the right reason,” he went on other is receivership, which is a liquidation approach. to present too long a laundry list of individual’s compliance While these sessions were occurring, some NRMLA members violations including statistically significant overevaluations of took the opportunity of being in Washington to pay visits to 25 properties, understated charges on Good Faith Estimates and a of the offices of their Senators and/or Congressmen and open a series of less severe but still unacceptable procedural and clerical dialogue about reverse mortgages or maintain one they had violations of both federal and state requirements. begun at previous Policy Conferences. Coming away, they “When there’s a downturn in business, there’s an upturn in reported a division between advocates and skeptics that again scams. Many fringe players run shoddy ads,” said Carole reflected the murkiness of the moment.

July - August 2011 Reverse Mortgage 9 Another Peek Into the Retirement Toolbox Visiting the Agencies, Programs, and Policies On the Side of the HECM customer

10 Reverse Mortgage July - August 2011 Nest Egg By Marty Bell Additional Tools in the Retirement Toolbox A year ago, we devoted a good part of our summer issue to a • Fear of the condition of state section called “The Retirement Toolbox,” in which we looked at and local government finances; many of the most prominent vehicles utilized to fund longevity • Unemployment; and the role that reverse mortgages can play in this equation. • A societal shift over the past 15 years from defined Researching that feature led us into a forest that could be called benefits to defined contribution retirement plans, where the the retirement funding sector. A civilian who like a majority employer assumes less of the burden and the employee more; of Americans has pretty much denied aging and, as part of that avoidance, has not made retirement saving a priority, might never • The increase in age expectancy; know just how dense and vast that forest is. The retirement • The decrease in birth rates creating a much lower ratio of workers funding sector, of which you, our members and readers, are all a to retirees; part, is a bountiful tract of associations, think tanks, academic • The drift from the traditional American family to a higher institutions, government agencies, coalitions and private companies percentage of divorces so that people who once funded retirement all devoted to research and product development and dissemination. as a couple now must fund it alone; And as you wend your way through it, you continue to find more and more good ideas to help seniors, not the least of which is a • The increased need of children to depend on their parents reverse mortgage. financially in an economy characterized by high unemployment, lower home values and depleted savings--and vice versa. In this issue, we reopen our retirement toolbox for another look, not at funding options this time, but at snapshots of 19 organizations This is a loaded package of fears. And difficult to overcome. who are doing ongoing research in this space, research that may There is little we as individuals can do about most of them — be helpful to you in formulating your own business plans and except maybe, in some cases, vote for the people we sense support strategies. We also take a peak at some websites created by these the best solutions. And help to educate. organizations and aimed at aiding consumers. Given the large percentage of people not preparing for retirement The sheer breadth of organizations and of people within them at all, there seems to be a disconnect between the research being concentrating on funding retirement is impressive, but also mind- done and tools being developed by these organizations and the boggling. It can’t help but make you wonder why there is such a public. A large part of the population is just not responding to the large retirement funding gap among our seniors citizens, why so battle cry to plan retirement. Somehow, the message is not loud many have ignored the necessity of preparing for the last third of enough. As Ken McDonnell, director of the American Savings life, why the whole concept of funding longer life is not more of a Education Council (which operates the very helpful Choose to national obsession, like social networks, poker and deficit reduction. Save website) recently told me, “the pieces are all in place but what is missing is promotion.” Looking at some of the research from the organizations highlighted in this issue is scary. None of the above is bad news for the reverse mortgage business. It all reconfirms what we learned from the focus groups and survey Only 38% of Americans feel they have enough saved to get them conducted by Marttila Strategies for NRMLA last year — our through retirement. (McKinsey and Company). Only 59% are society is now plagued by great fear and enormous need. And saving at all and of those 56% have less than $25,000 in savings reverse mortgages are one viable and valuable solution. They can — excluding home equity — reverse mortgage professionals help fill the gap and allay the fears. take note, according to the Empoyee Benefits Research Institute (EBRI) Retirement Confidence survey, But the most daunting task for all of us in the retirement funding sector is educating and building awareness. We often get frustrated That 21 year old annual survey, last published in March of this by inaccurate reporting or bogus accusations by government year, concludes that confidence among workers in their ability to officials on reverse mortgages, which can often be attributed to a retire has plunged to a new low. lack of knowledge. But we are not alone. The entire retirement Some of the research, including that by EBRI and the Aspen funding sector feels this. Institute, lists reasons for the current fears: With that in mind, take a look at the work of some of the • Fear of the economy is the top rated issue in almost all the organizations described in the following section. You may even research, based mostly on decreased home values and savings; find it useful to refer clients to some of these websites to reinforce • Fear of the future of Social Security and Medicare in a the value of a planned retirement. Benefits and financial products deficit-obsessed political environment; alone cannot fill up the retirement toolbox; we also need room for educational tools. • Fear of continually rising health care costs; • Low interest rates;

July - August 2011 Reverse Mortgage 11 Another Peek Into the Retirement Toolbox Voices of Retirement Security Faced with an Ocean-sized Retirement Funding Gap, a Look at Those Trying to Keep Tomorrow’s Seniors Secure

12 Reverse Mortgage July - August 2011 Another Peek Into the Retirement Toolbox How are we as a society going to bridge the vast retirement funding abyss? Think tanks, academic institutions and private firms – representing every political viewpoint – are offering solutions. They are gathering data and publishing studies and editorials to help shape the public policy debate. Reverse Mortgage magazine has compiled a partial list of such organizations, so that you can get a better understanding of the research that is being conducted and the conclusions that are being presented to policymakers and the American public.

AARP (www.aarp.org) between October 2007 and October • 33 percent planned to delay retirement As one might expect, America’s leading 2010, or for part of that period, to see • 37 percent relied on credit cards for advocacy group for the aging has a how they were coping with the recession everyday purchases treasure trove of research and guidance and its aftermath. on retirement planning. In a report • 36 percent stopped or cut back on The study shows that the recession drove published last October titled saving for retirement. millions of older Americans to deplete savings Recovering from the Great Recession: and reduce retirement expectations. • 12.4 percent lost their health insurance. Long Struggle Ahead for Older Among the key findings: Americans, AARP surveyed 5,000 A more detailed report, titled Beyond Americans age 50 and over who were • 67 percent filed for Social Security 50—2011, will be released later part of the labor force continuously benefits earlier than they had planned this year.

Brookings Institution The Heritage (www.brookings.edu) simplified system of Foundation investment choices The Brookings Institution is one of (www.heritage.org) and a set automatic America’s leading think tanks. Policy savings level. A conservative counterpart to the recommendations related to retirement Brookings Institution, The Heritage security are developed through the The concept was first William Gale Foundation supports the Automatic Retirement Security Project. The discussed in a paper IRA, but has been more vocal about project is led by William Gale and published in 2006 by J. Mark Iwry reforming Social Security. David C. John, a senior research (who most recently served as a Senior fellow at The Heritage Foundation, Adviser to the Secretary of the Treasury In a paper published in December who serves as deputy director. and as Deputy Assistant Treasury 2010 titled It’s Fair that Retirees’ Secretary for Retirement and Health Benefits Should Begin at an Older Age, The Retirement Security Project Policy) and the aforementioned David David John wrote “when the Social introduced the concept of the John titled Pursuing Universal Retirement Security program was created in 1935, Automatic IRA, which it describes as Security Through Automatic IRAs. While 65-year-old men could expect to a relatively simple, cost-effective way members from both political parties spend about 13 years in retirement to increase retirement security for the support the concept of an Automatic — 16 percent 75 million Americans working for IRA, it still has not been passed by of their lifetime. employers (usually small businesses) Congress. However, the Brookings Women of the that do not offer a retirement plan. Institution was pleased to see that President same age averaged Employees would be enrolled Obama included the Automatic IRA in 15 years — or 18 automatically into an IRA with a his proposed fiscal year 2012 budget, percent of lifespan — in retirement. so it still has a chance. David C. John Continued on Page 14

July - August 2011 Reverse Mortgage 13 Another Peek Into the Retirement Toolbox

Continued from Page 13 The National Council on Aging However, only a little (www.ncoa.org) more than half of adults older than 21 lived The National Council on Aging has been a key supporter to reach retirement age. Today, a male retiree born in 1940 of reverse mortgages and a partner of NRMLA’s since will spend 19 percent to 25 percent of his life collecting Social 2004’s Use Your Home to Stay at Home project. Security benefits — depending on whether he retired at age This past January, NCOA launched the Economic Security 65 or chose early retirement. A woman born in the same year Initiative to provide one-on-one counseling to offer assistance will collect benefits for 21 percent to 27 percent of her life.” to disadvantaged seniors. Counseling services are provided via 12 resource centers located across the country that include On June 13, The Heritage Foundation came out in local area agencies on aging and non-profit organizations. support of The Social Security Solvency and Sustainability Act, S. 804, introduced by Senators Lindsey Graham NCOA is a staunch supporter (R–SC), Rand Paul (R–KY), and Mike Lee (R–UT), of the Older Americans Act which would gradually increase the age thresholds to (OAA) – the primary vehicle receive Social Security benefits and reduce benefits for for delivering social, nutrition, higher-income retirees. and home and community-based services to seniors and their caregivers – which is due for reauthorization in 2011. NCOA published a paper in March, which offers recommendations to strengthen the OAA. A top priority The Urban Institute is to make “financial security” a new objective within the OAA, which states and counties will then use to define an (www.urban.org) elderly person’s standard of living. The Urban Institute maintains the Retirement Policy Program, which is currently focused on Social Security reform, issues involving older workers, future medical and The National Endowment long-term care expenses and the changing pension landscape. for Financial Education In April 2011, researchers examined retirement account (www.nefe.org) balances and concluded the retirement savings of American The National Endowment for Financial households took a big hit when the stock market crashed Education®, headquartered in Denver, in 2008. Recently, however, a portion of these losses have CO, describes itself as the only private, been reversed. nonprofit, national foundation wholly dedicated to improving the financial well-being of all Americans. According to The Urban Institute, assets in retirement accounts (defined contribution plans and IRAs) totaled While NEFE hasn’t published any recent data, the organization roughly $8.7 trillion in the third quarter of 2007. operates numerous web sites that teach financial management and retirement planning — including smartaboutmoney.org By the end of the first quarter of 2009, when the stock market and myretirementpaycheck.org — and it provides grants to bottomed out, retirement accounts had lost $2.7 trillion fund research projects that explore different financial topics. (31 percent) of their peak value. By the first quarter of For instance, in 2009, Dartmouth College published a study 2011, retirement account balances had rebounded to their funded by NEFE that explored ways to increase participation peak 2007 value in nominal terms. Adjusted for inflation, in retirement savings programs among low-income and however, they were still five percent below the peak. female workers.

Insured Retirement Institute billion, up 17% from $49.7 billion in the first quarter of (www.irionline.org) 2010. IRI noted that variable annuity assets reached $1.6 trillion, the highest level ever recorded by Morningstar. The Insured Retirement Institute (IRI) represents the annuity Recent research from the IRI reveals that one-third industry, thus much of the research compiled by the group of non-retired Boomers have indicated that they pertains to annuity sales and market trends. are unsure as to when they will retire, with IRI announced in May that annuity sales for the first quarter three out of 10 citing uncertainty about having of 2011 posted a double digit increase over sales from the sufficient assets as a top concern. same time period last year. Industry wide sales were $58.1 Coverage Continues on Page 18

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Another Peek Into the Retirement Toolbox

Employee Benefit • After rising in 2003 and for the next Institutional four consecutive years, the average etirement Research Institute 401(k) retirement account fell 27.8 R (www.ebri.org) percent in 2008, before rising 31.9 Income Council Founded in 1978, the Employee percent in 2009. (www.iricouncil.org) Benefit Research Institute (EBRI) • The average 401(k) account balance The Institutional Retirement Income develops public policy research and moved up and down with stock market Council, which receives the bulk education on issues related to economic performance, but over the entire of its funding from Prudential and security and employee benefits. six-year time period increased at an other companies that sell retirement Jack VanDerhei, the research director average annual growth rate of 10.5 products, is focused on amassing at EBRI (who incidentally spoke at percent and equaled $109,723 at knowledge about retirement income NRMLA’s 2011 Washington Policy year-end 2009. issues, trends, products and solutions. Conference), is considered a leading • In 2009, 21 percent of all 401(k) The IRIC has published several voice in matters related to finance. participants eligible for loans took one papers, including one in July/August EBRI has access to 51,852 401(k) plans against their 401(k) account (meaning 2010 titled The Problem With Living with 20.7 million participants and $1.21 they prematurely accessed funds) Too Long, that examines the challenges trillion in assets, which VanDerhei and compared with 18 percent at year-end that retirees face trying to stretch his colleagues regularly analyze. 2008 and year-end 2007. their retirement RETIRM AL EN Last November, EBRI published the savings over N T I EBRI is also the sponsor IO N T C results of a study that what could U T O of the American Savings I T M

analyzed data taken be a S E

Educational Council, N I from the database which publishes the prolonged over a six-year period consumer website period. from 2003 to 2009. ChooseToSave.com CO IL The study found: Jack VanDerhei UN C

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18 Reverse Mortgage July - August 2011 Another Peek Into the Retirement Toolbox

If a man retires at age 65, the probability is that his retirement About 25% will live to 93 years or older and almost 10% savings will need to last about 21 years, to age 86, with a small will survive until 98 or beyond. “Put another way, retirees possibility (about 10%) that his money will need to last 30 who assume they will not outlive the median life expectancy years or more, to age 95, the research found. will be taking a significant risk (50%) that they will run out Correspondingly, if a woman retires at age 65, the median of money in retirement,” the report adds. (i.e., 50% probability) life expectancy is 88, or 23 years.

The Women’s Institute MetLife Mature for Secure Retirement Market Institute (www.wiserwomen.org) (www.metlife.com/mmi/index.html) The Women’s Institute for a Secure Retirement (WISER) The Mature Market Institute is MetLife’s center of expertise helps women, educators and policymakers understand the in aging and longevity and is a recognized thought leader unique financial challenges faced by women. by business, the media, opinion leaders and the public. The most recent report published by WISER was done in Most recently, MMI published The MetLife Study of collaboration with The Society of Actuaries in December Caregiving Costs to Working Caregivers: Double Jeopardy for 2010, titled The Impact of Retirement Risk on Women. The Baby Boomers Caring for Their Parents, which found that report concluded that men and women don’t think far the average female caregiver loses $324,044 in wages and enough into the future to plan adequately for retirement. Social Security benefits caring for a parent, spouse or other Both male and female retirees say they typically look five loved one. years (median) into the future, while pre-retirees look 10 Last December, MMI partnered with the Women’s Institute years ahead. for a Secure Retirement to publish What Today’s Woman Women retirees are more concerned about having enough Needs to Know and Do: The New Retirement Journey, which money to pay for adequate health care, depleting savings offers guidance to women in today’s workforce and how and remaining in their homes, according to the report. they must plan differently from their mothers for retirement. Almost two-thirds of retirees say their finances are now in “A good investment plan is built on three key pieces of worse shape (64 percent of men, 63 percent of women), as information: how much you will need to support your do three-quarters of pre-retirees (77 percent of both men retirement lifestyle, how long you have between now and then, and women). Women are more likely than and how comfortable you are with taking financial risk,” men to say that as a result of the recession, the report says. “Your answers they feel they need to save more money. can drive your investment strategy and decisions as to how to divide your savings among Mature Market investments to reach your goal.” INSTITUTE

National Association of Government Defined Contribution Administrators A majority of survey respondents feel (www.urban.org) the biggest reason that people don’t save is because they generally do not understand how much they The National Association of Government Defined Contribution need to save for retirement. Others feel strongly that employees Administrators, Inc. (NAGDCA) represents state and local are just not concerned about planning for retirement or are not government administrators and private sector companies that using their contribution plans adequately. assist public employees with their retirement needs. According to a survey published by NAGDCA in March To help encourage more government employees to save, 71% 2011, there are 8.5 million government employees who are of survey respondents plan to take part in National Save for eligible to participate in some type of retirement plan, but Retirement Week (last year the dates were October 17-23), while only 1.9 million people chose to do so in 2010. The average 59 percent hope to simplify enrollment and 28 percent plan to offer employer matching. participation rate was 22 percent. Coverage Continues on Page 20

July - August 2011 Reverse Mortgage 19 Another Peek Into the Retirement Toolbox

Continued from Page 18 National Academy of National Association of State Social Insurance Retirement Administrators (www.nasi.org) (www.nasra.org) The National Academy of Social Insurance is made up Like NAGDCA, the National Association of State Retirement of the nation’s leading experts on social insurance, which Administrators (NASRA) focuses on pension and benefits includes Social Security, Medicare, workers’ compensation, issues at the state and local government level. unemployment insurance, related public assistance, and NASRA reports that most state and local government private employee benefits. employee retirement systems have substantial assets to In May, NASI published a comprehensive 44-page analysis weather the economic crisis; those that are underfunded are of Social Security titled Social Security Benefits, Finances, taking steps to strengthen funding. The association is quick and Policy Options: A Primer, which includes the following: to point out that pensions are funded and paid out over decades and that there is currently $2.7 trillion already set • 1 in 6 gets Social Security benefits aside in pension trusts for current and future retirees. It is • The average retired worker benefit in January 2011 was also worth noting that state and local government retirees $1,177 a month or about $14,120 a year do not draw down their pensions all at once. • About 90 percent of married couples and unmarried The average annual retirement benefit for public employees persons age 65 and older receive Social Security. is $22,600. For many retirees, including nearly half of Approximately 64 percent of these beneficiaries rely on all teachers and over two-thirds of firefighters and public Social Security for half or more of their total income safety officers, it is taken in lieu of Social Security. NASRA says that more than 90 percent of public • 59% of Americans age 65 and older do not have employees retire in the same jurisdiction a pension where they worked and approximately • In 2010, the Social Security Trust Fund collected $175 billion is distributed annually from $781.1 billion and paid out $712.5 billion in benefits. public employees pensions, making those Total assets were projected to be $2.6 trillion by funds a critical source of economic stimulus year-end 2010 to communities throughout the nation. • It is anticipated that by 2023, Social Security NA TIONAL expenditures will exceed Profit Sharing/401K incoming revenues for AC ADEM Y ouncil of merica the first time and that C A reserves will have to be O F SOCIAL (www.psca.org) org used to pay benefits. PROFIT SHARING/401k In October 2010, the Profit COUNCIL OF AMERICA INSURANCE Sharing/401K Council of America (PSCA) conducted a survey of 401(k) and profit sharing plan sponsors to determine how they are responding to current economic and regulatory changes. The Aspen Institute Most companies maintained contribution rates during the (www.aspeninstitute.org) past three years and some companies increased contributions. Chicago businessman Walter Paepcke first visited Aspen, Seventy percent of companies maintained matching Colorado in 1945. Inspired by its great natural beauty, contributions, while just 14.8 percent of companies he envisioned it as an ideal gathering place for thinkers, suspended the match. leaders, artists, and musicians from all over the world Plan sponsors took a variety of actions in the last year to step away from their daily routines and reflect on the concerning plan investments and participant education. underlying values of society and culture. Five years later, he Fifty-six percent of companies changed the investment founded The Aspen Institute. lineup in the last year, more than double the number that The Aspen Institute’s focus is not so much on publishing changed the investment lineup in 2009 (19.7 percent). research, but rather organizing seminars and public forums Fifteen percent of companies added investment advice as to discuss and debate national issues. Through its Initiative an option for participants, and 52.2 percent of companies Continued on Page 22 increased their employee education efforts.

20 Reverse Mortgage July - August 2011 Another Peek Into the Retirement Toolbox

Consumer Retirement Websites MyMoney.gov (www.mymoney.gov) This web site is maintained by the Financial Literacy and Education We uncovered several Internet web sites that provide a wealth of Commission (FLEC), which represents 22 federal agencies that are information on retirement planning strategies and tools for working to improve financial literacy and education. There is a tab consumers to consider for their “retirement toolboxes.” Four of on the home page called Life Events that takes you to another page these web sites are profiled below: filled with information on homeownership, going to college, getting Choose to Save® (http://choosetosave.com) married or divorced, and retirement. The retirement link takes you to different government agencies, such as the Social Security Developed by the Employee Benefit Research Institute (EBRI) and Administration and Department of Labor, that offer guidance. If its American Savings Education Council (ASEC) program, Choose you do a search for reverse mortgages, it links to articles found on to Save® is a repository that provides an impressive number of links to the Office of the Comptroller of the Currency’s web site (“Reverse other public and private-sector institutions committed to making Mortgages: Are They For You?”) and to the HECM Counselor saving and retirement planning a priority for all Americans. There search tool on HUD’s web site. are links to brochures, calculators, public service announcements and a Smartaboutmoney.org (www.smartaboutmoney.org) resources page that covers 40 different topics ranging from Aging to Elder Fraud and Abuse and Estate Planning. The National Endowment for Financial Education created this site to offer tips and resources from across the Web to help FeedThePig.com (www.feedthepig.org) consumers manage their money better. Two tabs on the home page Benjamin Bankes, a smartly dressed man wearing a pig mask to — Life Events/Financial Decisions and Resource Library — offer symbolize a piggy bank, helps younger consumers think through articles on retirement issues. Reverse mortgages are mentioned in at their spending and saving habits. The site was created as part of a least two articles, “Helping a Parent Financially,” and “Considering national campaign sponsored by the American Institute of Filing for Bankruptcy? Know the Alternatives First.” Certified Public Accountants (AICPA) and The Advertising There is another interesting section called Aging Parents — Financial Council to help Americans aged 25 to 34 take control of their and Emotional Decisions that includes articles titled, “Aging Issues: personal finances. There is a resources page that links to articles Confronting the Issues as a Family” and “Costs of Caring for an found on the AICPA web site covering topics, such as caring for an Aging Parent,” which quotes Consumer Reports statistics that taking elderly parent, retirement planning, reducing household expenses, in a parent can add $7,000 or more to household expenses, including and creating a budget. higher utility, food, and transportation costs.

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July - August 2011 Reverse Mortgage 21 Another Peek Into the Retirement Toolbox

Continued from Page 20 Prudential, Fidelity, on Financial Security, the Institute is trying to foster policies other think tanks, and and financial products that enable Americans to save and in- Mark Iwvy, Senior vest. So far this year, the Aspen Institute has hosted two events Advisor to U.S. focused on retirement security. Treasury Secretary The first event, on January 25, was a briefing for members of Tim Geithner. Three months later, a roundtable discussion Congress and their staffs called Making it Last: Lifelong titled Savings to Last a Lifetime was also convened in Washington, Retirement Solutions, featuring senior executives from D.C. to talk about ways to improve retirement security.

Center for The Peter G. Peterson Retirement Research Foundation (crr.bc.edu) (crr.bc.edu) Before concluding this article, I would be Named for billionaire and philanthropist Peter G. remiss if I didn’t mention the Center for Peterson, the Foundation is dedicated to increasing Retirement Research (CRR) at Boston College, arguably the leading public awareness of the nature and urgency of key academic voice in the policy debate over retirement security. fiscal challenges threatening America’s future and Led by Dr. Alicia H. Munnell, the Center for Retirement Research offering recommendations to address them. is prolific in its dissemination of research focused on Social Security, It recently published an article titled The Financial pensions (public and private), savings and consumption, work and Condition of Social Security which concludes that retirement, health and international issues. The Center publishes “Social Security is in an unsustainable financial the National Risk Retirement Index to measure the share of position in the medium and long term.” American households who are ‘at risk’ of being unable to maintain Its web site has a section on personal financial their pre-retirement standard of living in retirement. responsibility that talks about household debt, Over the years, the CRR has published several reports about household income trends, personal savings rates reverse mortgages. In 2001, A Primer on Reverse Mortgages was and steps we all can take to develop budgets and published, which described how reverse mortgages work, current financial plans that prepare us for retirement. market conditions and offered possible reasons for its limited The Foundation pointedly asks, “Why should low appeal at the time. Five years later, authors Andrew Eschtruth, personal savings concern us? On an individual level, Wei Sun, and Anthony Webb wrote Will Reverse Mortgages Rescue they mean that many American families are ill- the Baby Boomers? that examined the extent to which homeowners prepared for future economic downturns, and for can count on housing wealth to support their consumption retirement. On a macro level, low personal savings in retirement. could mean that as the government becomes In 2007, the CRR published a survey titled Do People Tend to unable to fund its large and growing deficits Tap Their Home Equity in Retirement? The homeowners surveyed domestically, it has to rely heavily on foreign indicated they “do not plan to affirmatively access their home lenders. This economic equity but rather plan to hold on to their house for insurance position could against unplanned living or health expenses or to leave as a bequest.” compromise our Approximately, 55% indicated they would downsize, 15% said national interests.” they would consider a reverse mortgage, while 11% preferred a home equity loan and the remaining 18% said they weren’t sure. The survey pointed out that because the retirement landscape is Conclusion becoming more “treacherous” that it may be wise to conduct the This list is just a drop in the bucket. Dozens more same survey five years from now (which would be 2012) to see companies, universities and non-profits (including whether the same attitudes still persist. NRMLA) are gathering research and NRMLA is working closely with the Center for Retirement adding their voices to the retirement Research to add to the discussion around retirement security and security debate. Visit to develop future reverse mortgage topics to investigate. NrmLAOnline.ORG 22 Reverse Mortgage July - August 2011 NRMLA Annual Meeting 2011

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The kitchen table. It is the cradle of reverse mortgage sales. Over need. Call centers are “...great for borrowers with a need, some the last twenty years reverse lenders have built their business by knowledge and comfort in making buying decisions over the first attracting, and then meeting seniors in their homes. But phone,” said Kent. With more baby boomers retiring, we will will that approach continue to be effective? As the demographic see increased acceptance in using both the phone and internet of the potential borrower shifts with the arriving Baby Boomer to make buying decisions with these more technologically savvy generation so will the sales approach. Reverse Mortgage Solutions retirees. Presently about 70% of RMS’ sales force are in the field (RMS) has taken a dual approach that employs both the and the remaining 30% work in the call center. traditional kitchen table and remote call center. Matching borrowers and The right fit loan officer skill sets RMS is widely known as a servicer of reverse mortgages but Just as the one size fits all approach doesn’t work with borrowers that is changing. Their first push to the call center model was it applies also to the reverse mortgage salesforce. Mr. Kent feels developed as a defensive effort to look at possible refinances it’s imperative to match an originator’s skill set with the right within their loan service portfolio. Then recruitment began in sales model. “Face to face salespeople are often better suited earnest in February with Bank of America’s exit which provided for the kitchen table.” RMS makes adjustments in training or more opportunities for field and call center staff. “The goal was matching loan officers according to their strengths knowing the low-hanging fruit,” said Michael Kent, Senior Vice President at window of opportunity is short and diminishes over time with RMS, referencing refinances of serviced loans. They then looked the prospective borrower. strategically for a model that would encompass differing prospective borrowers knowing one size does not fit every borrower’s need or As the call center model requires a strong ability to project preference. With this in mind, RMS has taken a unique two- motivation and educate, RMS has taken it a step further. Knowing pronged approach employing both a call center and field sales each loan officer posseses specific sales strengths RMS utilizes a force. “Some folks need or want additional attention or prefer team approach to selling which is unique in our industry. For a one to one relationship,” said Kent, “however, many seniors example, some loan officers are better suited to the early process prefer not to have someone in their home and have a sense of of educating the borrower while others excel in moving the safety in sharing information over the phone.” After screening prospect to take action and move forward. the potential borrower, the sales team at RMS matches the caller Today, most call centers typically rely upon one originator with either an originator in the call center or an external agent throughout the entire process which poses a problem. It is in the field. Often this boils down to the caller’s motivation and difficult to find a loan officer who possesses the entire skill set needed for phone sales. And when a lead ages in the call center they may change the sales approach from the call center matching some loan officers are better them with an external field loan officer who would meet the suited to the early process borrower in person. of educating the borrower while Metrics and Sales Success: others excel in moving Metrics. It’s the detailed and measured analysis of each step of the prospect to take action the sales process. These measurements are invaluable as most leads are converted within 60 days. If a borrower has not taken and move forward. most call action within 120 days RMS employs other approaches. With centers typically rely upon lead costs ultimately determining the bottom line, measuring one originator throughout ROI (return on investment) is mission-critical. One unique advantage the call center model holds is the ability to closely the entire process which track contacts, conversion ratios and costs which are more poses a problem. difficult to track in the traditional field sales force. To manage Continued on Page 30

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ay ocs nc Credit Counseling: B D , I . Phone: 1-800-527-7595 Since 1994, Bay Docs’ core focus has been reverse mortgage E-mail: [email protected] document preparation. Bay Docs is the document provider of choice for many of the top 20 reverse mortgage lending institutions, including Celink two of the top three. We remain the only Celink’s Reverse Mortgage Servicing Mission is threefold. document preparation We Lead — company dedicated solely Ethics, integrity, and unwavering core values direct all of our actions. to the reverse mortgage industry. We Support — We are your one-stop resource for pre-application, three-day We support our clients disclosure and closing packages for lenders and brokers who offer through new and often the FHA Home Equity Conversion Mortgage (HECM) loan uncharted territory. program. We have a highly qualified staff with extensive legal, compliance and technology expertise, which allows us to offer We Innovate — services beyond traditional document preparation. We explore and uncover new Call: 888-297-3627 or visit www.baydocs.net and cost-effective ways to increase our value to our Contact: Kathleen Leonard 415-408-5134 or email clients and their borrowers. [email protected] We meet every industry challenge and every client and borrower need with the confidence that comes from knowing who we are Cambridge Credit and what we’re about. Your reputation and your borrowers are safe with Celink. Counseling Corp. Visit celink.com for a full Corporate Overview. Cambridge Credit Counseling is a 501(c) John LaRose, CEO: [email protected] (517) 321-9002 (3) non-profit housing and credit counseling agency, providing financial Ryan LaRose, COO: [email protected] (517) 321-5491 education and a variety of counseling services to individuals and families across the country. Cambridge offers credit/debt Clearpoint Credit Counseling counseling, foreclosure intervention ClearPoint Credit Counseling Solutions is one of the nation’s counseling, reverse mortgage counseling, first-time homebuyer largest 501(c)(3) nonprofit credit counseling organizations, and education, post-purchase, and rental assistance counseling. has the third largest capacity for reverse mortgage counseling. The agency’s counselors are nationally trained and certified and We provide counseling nationwide, and offer have an average tenure of nearly a decade, making them one face-to-face appointments in of the most experienced, full-service financial counseling 17 markets. As a national HUD agencies in the country. Cambridge’s housing counseling services approved intermediary, are approved by the U.S. Department of Housing and Urban we follow all of the newest Development, and their reverse mortgage counseling services HUD requirements. are approved by the Massachusetts Executive Office of Elder C R E D I T C O U N S E L I N G S O L U T I O N S Affairs. Cambridge is a member of the Better Business Bureau Phone: 866-786-9268 and currently maintains an A+ rating. The agency has been an www.ClearPointCCS.org/ ISO 9000 certified agency since 2001. Since their inception in ReverseMortgage 1996, Cambridge has provided financial counseling to well over Director of Housing: [email protected] 1 million consumers across the country. www.cambridgecredit.org www.keepyourhome.us James B. Nutter & Company Housing Counseling: Known as America’s First FHA Reverse Mortgage Lender, James Phone: 1-800-757-1788 B. Nutter & Company is a national mortgage banking firm E-mail: [email protected] licensed in 50 states, the District of Columbia and the Commonwealth of Puerto Rico. Founded in 1951, the company’s

26 Reverse Mortgage July - August 2011 headquarters are located in Kansas City, Missouri where ReverseVision is privately owned and independent and focuses the firm on reverse mortgages exclusively. The company is located in specializes in originating FHA, VA and Conventional loans. North Carolina and employs a team of leading software In 1989, James B. Nutter & Company was honored to close engineers and reverse mortgage specialists with a combined the first FHA HECM Reverse Mortgage in the nation for experience of over 50 years. Ms. Marjorie Mason of Fairway, Kansas. www.reversevision.com www.jamesbnutter.com (919) 834-0070 Retail Division: [email protected] Chris Peters (800) 342-7334 Wholesale Division: Paul Madson (800) 798-3946 Reverse Mortgage Solutions Reverse Mortgage Solutions (RMS) is a premier provider of MetLife Bank hosted reverse mortgage loan servicing software as well as the nation’s leading authority on all aspects of reverse mortgages — MetLife Bank N.A. , a MetLife company, is a federally chartered specializing in reverse mortgage servicing and sub-servicing. The bank offering deposit products and a nationwide retail and RMS suite of reverse mortgage technologies automates the entire wholesale provider of home financing. With a dedication to reverse mortgage life-cycle responsible reverse mortgage lending, MetLife Bank is from loan origination to committed to helping older Americans make the most out of loan servicing to Ginnie Mae this important mortgage option. The Bank offers a wide range HMBS issuance and master of federally-insured HECM loan options, as well as skilled, servicing. straightforward guidance that simplifies the loan process and helps customers make The corporate objective is to informed decisions. continue to be a dominant MetLife Bank is a force in all aspects of reverse member of the National mortgage business, as well as other mortgage and Reverse Mortgage mortgage-related specialty serving products. To learn more about Lenders Association RMS click here: www.rmsnav.com (NRMLA), and we adhere to the highest ethical standards in the industry. Career opportunities: UFG/Reverse it! Call 1-866-951-4777 or visit Urban Financial Group & Reverse it! offer a complete line of www.metlifebank.com/careers products and services in the retail and wholesale reverse mortgage Wholesale division: Call 1-866-359-3817 or email Mike industry, respectively. Consistently ranked among the top ten Mooney at [email protected] lenders in the nation, Urban Financial Group and Reverse it! have built their success using a turn-key, streamlined approach MetLife Bank, N.A. is an Equal Opportunity/Affirmative Action Employer. for their clients to Mortgage financing provided by MetLife Home Loans, a division of assure all loans are MetLife Bank, N.A., Equal Housing Lender. © 2010 METLIFE, INC. closed accurately, R0511183309[exp0612][All States][DC] quickly, and above all — ethically. As a pioneer in the reverse ReverseVision mortgage industry, Urban Financial Group also uses its strength, ReverseVision is a leading technology company in the reverse experience, and proud NRMLA affiliation to lobby for fair laws mortgage industry. 10,000 users in 1000 companies rely on that protect seniors from abusive and predatory practices. Visit ReverseVision to originate reverse mortgages. us at www.reverseit.com Loan officers like the simplicity of ReverseVision and the Career opportunities: Call 888-777-3311 or powerful graphical representation of reverse mortgages. email us: [email protected] Lenders rely on ReverseVision for RESPA compliance and use ReverseVision’s reporting features to manage their operation.

July - August 2011 Reverse Mortgage 27 HECM Volume Trends Below is a graph of HECM activity by volume from March, 2009, through May 31, 2011. 20,000 18,000 Endorsements Applications 16,000

14,000

12,000

10,000

8,000

6,000

4,000 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Source: Reverse Mortgage Insight (www.rminsight.net)

The Nation’s 20 Largest HECM States Below is a ranking of HECM activity by state from January 1, 2011, through May 31, 2011.

Rank Y-o-Y % MARKET- RANK Change STATE LOANS ISSUED CHANGE MAX. CLAIM AMOUNTS SHARE 1 0 California 4,471 6.8% $1,863,112,224 14.0% 2 1 Texas 2,753 13.5% $444,675,094 8.6% 3 -1 Florida 2,208 -23.1% $447,199,175 6.9% 4 0 New York 1,901 10.5% $708,151,902 6.0% 5 4 Pennsylvania 1,422 34.5% $257,503,130 4.5% 6 0 New Jersey 1,376 18.4% $411,966,532 4.3% 7 1 Virginia 1,289 14.7% $306,168,465 4.0% 8 -3 Maryland 1,072 -23.2% $272,710,076 3.4% 9 -2 Illinois 847 -25.0% $164,774,965 2.7% 9 1 Washington 847 -1.7% $251,906,500 2.7% 9 7 North Carolina 847 44.8% $173,411,803 2.7% 12 -1 Georgia 801 -1.0% $152,070,119 2.5% 13 2 Puerto Rico 727 18.2% $125,731,450 2.3% 14 -1 Massachusetts 660 0.0% $218,490,500 2.1% 15 -1 Arizona 646 3.5% $140,511,803 2.0% 16 -4 Oregon 591 -16.1% $152,803,690 1.8% 17 0 Colorado 562 7.7% $164,707,926 1.8% 18 0 Tennessee 561 13.8% $97,326,930 1.8% 19 2 South Carolina 547 18.7% $109,563,725 1.7% 20 2 Alabama 529 15.3% $81,229,793 1.7% Source: Reverse Mortgage Insight (www.rminsight.net)

28 Reverse Mortgage July - August 2011 The Nation’s top 100 HECM Lenders

Y-o-Y Max. Y-o-Y Max. LENDER Loans % Claim Market- LENDER Loans % Claim Market-

RANK Issued change Amounts* share RANK Issued change Amounts* share 1 Wells Fargo Bank NA 7,479 29.0% 1,964.60 23.4% 51 Open Mortgage LLC 54 -34.9% 18.89 0.2% 2 Bank Of America NA 3,456 31.5% 937.34 10.8% 52 Seniors Reverse Mortgage 53 -63.7% 12.09 0.2% 3 Metlife Bank 2,475 175.6% 637.03 7.7% 53 Sidus FIinancial LLC 52 0.0% 10.25 0.2% 4 One Reverse Mortgage LLC 1,868 67.1% 317.51 5.8% 53 Harvard Home Mortgage Inc. 52 -49.0% 9.07 0.2% 5 Generation Mortgage Co. 625 16.2% 138.80 2.0% 55 Academy Mortgage LLC 51 -44.6% 11.98 0.2% 6 American Advisors Group 539 66.9% 112.37 1.7% 55 Gateway Funding Diversified 51 10.9% 13.02 0.2% 7 Guardian First Funding Group 437 -12.4% 98.09 1.4% 55 Brian A Cole & Associates Ltd. 51 -67.9% 5.56 0.2% 8 TPO Brokers** 409 n/a 118.76 1.3% 58 Gmfs LLC 50 -28.6% 8.31 0.2% 9 Urban Financial Group 392 -43.5% 62.14 1.2% 58 Vig Mortgage Corp. 50 n/a 9.40 0.2% 10 Reverse Mortgage USA Inc. 369 -19.1% 53.64 1.2% 60 Allied Home Mortgage Capitol Co. 49 -25.8% 9.00 0.2% 11 Genworth Financial 340 142.9% 80.60 1.1% 61 Primary Residential Mortgage 46 -8.0% 9.43 0.1% 12 New Day Financial LLC 307 -10.2% 61.11 1.0% 62 Fulton Bank National Associates 45 25.0% 9.97 0.1% 13 Security One Lending 302 17.5% 88.12 0.9% 63 Approval First Home Loans Inc. 44 29.4% 14.43 0.1% 14 PNC Reverse Mortgage LLC 296 81.6% 68.85 0.9% 63 Universal Lending Corp. 44 10.0% 11.36 0.1% 15 Senior Mortgage Bankers Inc. 253 8.1% 40.94 0.8% 65 Axis Financial Group Inc. 43 n/a 4.66 0.1% 16 M and T Bank 245 7.9% 43.60 0.8% 66 AA Mortgage Group LLC 42 -38.2% 7.72 0.1% 17 The First National Bank 244 2340.0% 90.13 0.8% 67 M and I Marshall and Ilsley Ba. 41 -54.4% 7.31 0.1% 18 Financial Freedom Acquisition 232 -57.4% 73.07 0.7% 68 Montgomery Mortgage Inc. 40 -49.4% 6.92 0.1% 18 Great Oak Lending 232 -18.3% 49.82 0.7% 68 Metro Island Mortgage Inc. 40 42.9% 6.97 0.1% 20 Money House Inc. 226 10.2% 38.60 0.7% 70 Gateway Reverse Mortgage Group 39 -57.1% 3.60 0.1% 21 Net Equity Financial Inc. 201 -42.2% 53.40 0.6% 70 Sun West Mortgage Co. Inc. 39 143.8% 13.62 0.1% 22 Suntrust Mortgage Inc. 182 43.3% 36.52 0.6% 70 Traditional Home Mortgage Inc. 39 -58.5% 11.58 0.1% 23 Ireverse Home Loans LLC 178 109.4% 44.15 0.6% 73 United Northern Mtg. Bankers 38 46.2% 15.20 0.1% 24 Equipoint Financial Network Inc. 167 -20.5% 44.26 0.5% 73 Pinnacle Capital Mortgage Corp. 38 46.2% 10.99 0.1% 25 Midcontinent Financial Center 152 61.7% 36.38 0.5% 73 Urban Housing Mtg. & Rty. 38 -43.3% 5.12 0.1% 26 Royal United Mortgage LLC 120 66.7% 26.69 0.4% 73 Health One Credit Union 38 123.5% 14.77 0.1% 27 Aspire Financial Inc. 117 -19.3% 16.95 0.4% 73 Aramco Mortgage Inc. 38 35.7% 17.04 0.1% 28 Primelending (Plainscapitol) 111 158.1% 27.85 0.3% 73 Soveriegn Lending Group Inc. 38 533.3% 18.17 0.1% 29 Senior American Funding Inc. 95 -34.0% 31.19 0.3% 79 Guaranteed Home Mtg. Co. Inc. 37 68.2% 15.07 0.1% 30 Mas Associates 88 -11.1% 22.63 0.3% 80 Homeservices Lending LLC 35 400.0% 12.64 0.1% 31 Mortgageshop LLC 76 -17.4% 14.43 0.2% 81 James B Nutter and Co. 34 21.4% 6.13 0.1% 31 Webster Bank 76 24.6% 19.07 0.2% 81 Oceanfirst Bank 34 47.8% 6.56 0.1% 31 Stay In Home Mortgage Inc. 76 -24.0% 15.46 0.2% 83 Libertystreet Financial Group 33 -8.3% 14.71 0.1% 34 All Finsncial Services Inc. 74 17.5% 10.41 0.2% 83 Prosperity MOortgage Co. 33 3.1% 12.04 0.1% 35 United Southwest Mtg. Corp. 73 28.1% 26.87 0.2% 83 East Coast Capital Corp. 33 -10.8% 12.90 0.1% 36 Reverse Mortgge Solutions Inc. 70 n/a 14.65 0.2% 86 Atlantic Bay Mortgage Group 32 39.1% 7.00 0.1% 37 American Pacific Mortgage 69 16.9% 22.57 0.2% 86 Priority Mortgage Corp. 32 -69.5% 5.31 0.1% 38 Christensen Financial Inc. 67 86.1% 13.43 0.2% 86 Village Capital & Investment L 32 68.4% 8.19 0.1% 39 Home Savings of America 64 93.9% 18.86 0.2% 89 Retirement Life Funding LLC 31 3.3% 11.68 0.1% 40 Trinity Reverse Mortgage Inc. 63 70.3% 29.16 0.2% 89 Augusta Mortgage Inc. 31 3000.0% 8.84 0.1% 40 Amtec Funding Group LLC 63 -10.0% 19.33 0.2% 89 American Senior Lending Inc. 31 -38.0% 6.14 0.1% 40 Tripoint Mortgage Group Inc. 63 53.7% 32.81 0.2% 89 Rockland Trust Co. 31 6.9% 9.45 0.1% 43 Sun American Mortgage Co. 62 100.0% 13.61 0.2% 89 Metamerica Mortgage Bankers Inc. 31 -66.7% 5.27 0.1% 44 Nationwide Equiteis Corp. 59 5.4% 23.00 0.2% 89 Guild Mortgage Co. 31 -31.1% 9.66 0.1% 44 Envoy Mortgage Ltd. 59 -3.3% 13.36 0.2% 89 Senior Funding Associates 31 -20.5% 13.90 0.1% 46 First Mariner Bank 58 -68.3% 14.52 0.2% 89 Value Financial Mortgage Svcs. 31 -39.2% 5.70 0.1% 47 Integrity 1st Mortgage Inc. 57 -60.4% 7.71 0.2% 97 Securitynational Mortgage Co. 30 -11.8% 5.97 0.1% 47 Upstate Capitol Inc. 57 -46.2% 11.57 0.2% 97 Sterling Savings Bank 30 2900.0% 7.15 0.1% 47 Network Funding LP 57 29.5% 11.46 0.2% 97 McGowin KIing Mortgage LLC 30 -26.8% 5.42 0.1% 50 Cherry Creek Mortgage Co. Inc. 55 3.8% 16.84 0.2% 97 Wholesale Capital Corp. 30 66.7% 12.21 0.1% *In Millions From January 1, 2011 through May 31, 2011 **These are loans originated late last year and earlier in 2011 Source: Reverse Market Insight (www.rminsight.net) by Third-party originators that FHA could not identify.

July - August 2011 Reverse Mortgage 29 Continued from Page 24 costs, RMS has created models for cost per lead and funded loan that allow them to predict needed returns before purchasing “Some folks need or want leads. Typically lenders are not able to determine ROI until additional attention or prefer a after the money has been spent which is an expensive and risky proposition, according to Kent. RMS’s approach is to say “If I buy one to one relationship. however, a lead at X amount of dollars, what conversion ratios must I achieve many seniors prefer not to have to succeed?” RMS then factors in commissions, expenses and conservative historical conversion ratios. Again, without strong someone in their home and have metrics such money-saving endeavors would be impossible. a sense of safety in sharing Fully integrated technology information over the phone” Another advantage RMS holds is their proprietary loan origination system ( LOS) and servicing platform. New leads begin in their front-end lead management system and then Looking ahead: progress to the LOS (RM Compass) for proposal and application and ultimately in the servicing platform (Navigator). There is a As our industry and the population we serve evolves so does the clear progression from lead inception to closed and funded loan. sales process. Will the reverse mortgage be purchased differently Loan officers can see real time updates of their loan pipeline at in the future? Will the traditional kitchen table sales model fade any moment. into obscurity in favor the internet and call centers? Mr Kent speculates “the reverse mortgage may be commoditized in the In the early stages of qualifying a lead valuation analysis is same way traditional mortgages were with Lending Tree, Ditech addressed. “We use an integrated AVM (automated valuation & Quicken Loans, shifting to a web presence.” Perhaps. However model) for home prices tracking trends by zip code and MSA,” today companies like RMS are innovating improved technology, said Michael Kent. Controlling borrower data from lead to and a dual sales model as a more profitable means to reach servicing gives RMS an unparalleled advantage of tracking potential borrowers. While call centers are not new themselves, several data points improving current sales ratios and opening their use will continue to evolve just as the HECM program doors for future sales. itself has over the last 20 years.

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30 Reverse Mortgage July - August 2011